Investing

VST: Somehow Beating NVDA As The Best-Performing S&P 500 Stock of the Year

Austin Smith

Published: September 30, 2024 9:07 am

Key Points:

• VST is the top-performing S&P 500 stock, outperforming Nvidia.
• Utility stocks are in demand due to reliable dividends and expected interest rate cuts.
• Consider smaller utility stocks or the utility index (XLE) for diversification.
• With the competition heating up for Nvidia, investors are already starting to look ahead to 2025’s best investments. See what the hype is all about here.

The discussion focuses on the exceptional performance of VST, the top-performing S&P 500 stock this year, even surpassing Nvidia. VST is a utility company, part of a sector that has seen significant growth, with the utility index up over 20%. The demand for electricity, driven by the expansion of technology like Bitcoin mining and AI, ensures that utility stocks remain essential. The conversation suggests that while VST has had an impressive run, investors might also consider smaller utility stocks or the utility index (XLE) for potential opportunities. Dividend-paying stocks in this sector are highlighted as safe and appealing investments, especially with anticipated interest rate cuts.

Overview of VST’s Performance

• VST has outperformed other stocks in the S&P 500, even surpassing Nvidia.
• The company’s success has gone largely unnoticed by the general public.

Utility Sector on the Rise

• Utility stocks, including VST, have seen significant growth, with the utility index up over 20% this year.
• Historically, utility stocks were popular with conservative investors like “widows and orphans,” but the growing demand for electricity has expanded their appeal.

Electricity Demand Driving Growth

• The increasing need for electricity, driven by factors like AI and Bitcoin mining, has been a key driver of the utility sector’s success.
• Major utility companies like Duke, Dominion, and others are trading at 52-week highs.

Interest Rates and Dividend Stocks

• Falling interest rates are expected to drive continued growth in dividend-paying stocks, particularly safe options like utilities.
• Wall Street predicts further rate cuts, which could make utility stocks even more attractive.

The Essential Nature of Utilities

• Utility stocks are seen as a critical part of the American infrastructure, similar to phone lines, railroads, and interstates.
• The demand for electricity is essential for both residential and commercial clients.

Investment Considerations

• Investors need to consider whether VST still has room to grow after its significant rise.
• Alternatives include investing in the XLE utility index or smaller utilities like Black Hills and Northwest, which offer strong dividends and stability.

Conclusion

• While VST has been a standout performer, there may be opportunities in other parts of the utility sector for those looking to diversify or find undervalued stocks.